Double Dip or Expansion – the Controversial Market Forecast
Market strategist are always trying to predict what will happen with the stock market and they are right just as often as the weatherman was two decades ago. There is no way to accurately tell what millions of individuals are going to do with their money. There is another problem with answering the question “is another double dip coming?” There is no real definition as to what a double dip is and many experts have different opinions, so it is difficult to tell who is correct.
Since there is not a clear line defining what a double dip really is, for the sake of this article we will say that it is a recession followed by twelve months or less of growth and another recession. There have only been three double dips since 1854 under these circumstances, which makes this phenomenon extremely rare. Many may think that the crisis in 1980 was a double dip recession, but the growth period was longer than a year which disqualifies it from our definition. Even if we extend the definition to include as a double dip any instance in which there have been eighteen months separating the two recessions, we are still left with only five instances altogether.
Experts like throwing terms around that might scare investors and the best tool to protect finances and investments is education. Knowing the market and trends can allow you to make a wise decision. The worries of a double dip happening are pretty much over, as growth expansion has been steady for at least two years. This means that any recession that happens now will be considered a new recession. In the United States things are looking brighter, with many blue chips posting outstanding profit margins and exceeding analyst’s estimates. Of course it hasn’t been all good news though. There was that mishap with JPMorgan and the two billion dollar investment loss which will hurt their numbers for the quarter. However, looking at Apple and Amazon we can see the other side of the coin. Add to this the decrease in unemployment rate and the increase in the housing market, and it is clear that the stock market is indeed in recovery.
With all this positive feedback it is easy to let guards down. Caution should be taken, as this is just what is happening nationally. The current Euro crisis leaves much to be desired. Once the unifier of the whole European region and a great idea, the Euro is now endangered. Greece is one of the countries suffering the most and their exit from the Union could have devastating effects. Attempts have been made to smooth the situation over the last year with little results to show.
Worries at this point should no longer be whether or not there will be a double dip recession. Expansion growth has been evident for the last 24 months and could expand. What experts are warning about is a new recession due to the events happening in Europe. Doing thorough research, asking questions to brokers and using the tools online should aid any investors out there wanting to gain from the chaos or at least minimize their losses if things turn sour.
The information supplied in this article is not to be considered as medical advice and is for educational purposes only.
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 Investment Basics 6 Jul 2010 |
